Covid-19 was a black swan event for the CV segment: Tata Motors

Buses, or what we call commercial passenger vehicles, saw a savage cut of upwards of 80% (in terms of sales) in H1FY21. But within that, Tata Motors saw a rising demand for ambulances. Wagh says that as and when schools open and corporates revise their work-from-home policies, I think the demand will return.

By:December 28, 2020 10:44 AM
Senior counsel Shyam Divan, appearing for the SP Group firms, reiterated that the conduct of the Tata Sons board in ousting Mistry was in violation of the principle of corporate governance

 

With economic activity picking up pace, the commercial vehicle (CV) sales turnaround could be round the corner, albeit in varying degrees in different CV sub-segments, such as M&HCVs, LCVs, pick-ups, buses, etc. “Q2 sales are better than Q1, and in Q4 we expect to outperform the Q4 of last year,” says Girish Wagh, president, Commercial Vehicles Business Unit, Tata Motors, in an interview with FE’s Vikram Chaudhary.

By when do you see demand returning to normal in the CV segment?

Covid-19 was a black swan event for the CV segment; it immediately followed axle-load regulations, reduced freight demand, BS6 impact, retail finance constraints, etc. It aggravated the slowdown the segment was already going through. However, Q2 sales are better than Q1; in fact, in October and November our top line numbers in terms of wholesales were almost equal to those in the same months of the previous year, so we are catching up. In Q4, the segment might perform better than the Q4 of last year.

What about buses? Due to social distancing norms still being followed and people using private vehicles, do you think buses sub-segment may not see recovery for quite some time?

Buses, or what we call commercial passenger vehicles, saw a savage cut of upwards of 80% (in terms of sales) in H1FY21. But within that, we saw rising demand for ambulances. As and when schools open and corporates revise their work-from-home policies, I think the demand will return; I also expect state transport undertakings to start looking at fresh purchases, but buses will see the slowest recovery within the CV space.

Did the CVs that were lying idle during the lockdown need special servicing, etc?

We track our workshop utilisation levels across the country, and have seen that workshop utilisation has already gone back to the levels of last year, even slightly inching up. During the lockdown, we approached operators/owners of idle trucks and buses and offered servicing to ensure their business restarts smoothly; our breakdown assistance service was working even during the lockdown.

Are there any dealers who went out of business?

The entire industry is under stress. But every stakeholder—from dealers and suppliers and OEMs—worked hard to identify cost elements that could be controlled. At Tata Motors, as we prepared our business continuity plans, we did the same for dealers as well. As the business is coming back to normal, we have seen that these steps we took have been helpful.

What are your views on the vehicle scrappage policy?

It will be beneficial not only for the industry because it would lead to replacement demand, but also in terms of reducing pollution levels; once you replace the old BS1, BS2, BS3 and BS4 vehicles with the new BS6 ones, pollutant levels will automatically come down. Second, it will improve safety of the vehicles. The policy will also lead to job creation. We are eagerly awaiting the same.

Do you think connected vehicles will get popular in the CV space?

Vehicle connectivity is the way forward for this segment. We pioneered the connected vehicle technology with the Tata Fleetman almost seven years ago, and have more than 2 lakh M&HCVs plying on the roads fitted with this technology. When we moved to BS6, we were clear that we will just not focus on the product meeting new emission standards, but will also make the product so advanced that it makes solid business sense for the customer; the focus was on creating products that offer lower total cost of ownership—this includes connectivity features and improving the comfort and convenience in our vehicles. Our new technology, called the Fleet Edge, the next-gen digital solution for optimal fleet management, is a step in that direction.

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